Amicus Curiae Brief — Cisneros v. Alpine Ridge Group

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No. 92-551 2% WN

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1992

JACK F. KEMP, SECRETARY OF THE

UNITED STATES DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT, et al.,

Petitioners,

Vv.

ALPINE RIDGE GROUP, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

AMICUS CURIAE BRIEF OF SOUTHWIND

ACRES ASSOCIATES, SOUTHGATE VILLAGE

APARTMENTS AND OTHER CLASS MEMBERS AS

AMICI CURIAE IN SUPPORT OF RESPONDENTS

LARRY DERRYBERRY

(Counsel of Record)

GEORGE WILLIAM VELOTTA, II

GLADYS E. CHERRY

JAMES W. DOBBS

DERRYBERRY, QUIGLEY,

PARRISH, SOLOMON &

BLANKENSHIP

4800 North Lincoln Blvd.

Oklahoma City, OK 73105

(405) 528-6569

GARY L. MCKNIGHT

P.O. Box 310

McAlester, OK 74502

(918) 423-7516

~ BEST AVAILABLE COPY™

TABLE OF CONTENTS

PAGE

TABLE OF AUTHORITIES

INTEREST OF THE AMICI CURIAE

SUMMARY OF ARGUMENT .

ARGUMENT

l.

me

Background

The Parties' Intended to

Utilize the AAAFs as the

Sole Method of epeiates

Contract Rents .

HUD Abandoned Agreed Upon

Formula as Sole Method to

Determine Contract Rents

Rainier View Decision

Properly Construed Meaning

of Contract and Intent of

Parties .

Following the Rainer View

Decision, Congress Enacted

Section 801 to Save Money

CONCLUSION

o ®

10

16

18

21

31

iii iv

TABLE OF AUTHORITIES PAGE

CASES PAGE Section 8 of the United States

Housing Act of 1937, as

Acacia Villa, et al. v. Jack F. amended, 42 U.S.C. §1437f passim

Kemp, 774 F.Supp. 1240

(C.D. Cal. 1990)... . +++ 24 | 24 C.F.R. §888.203(b) .... 15

24 C.F.R. §888.204 ...... 20

Alpine Ridge Group, et al. v. 41 Fed.Reg. 49440 (1976) ... 15

Jack F. Kemp, 764 F.Supp. 1393

(W.D. Wash. 1990) ‘oe ae a 24

MISCELLANEOUS

Alpine Ridge Group, et al. v.

Jack F. Kemp, 955 F.2d 1382 Restatement (Second) Contracts

(9th Cir. 1992) .. +++ + Ty, 28 EE EE Ee ae eee 14

Bowen v. Public Agencies 135 Cong. Rec. S 16602

Opposed to Social Security (November 21, 1989) ..... 25

Entrapment (POSSE), 477 U.S.

41 (1986) ....+ ++ +++ £28 135 Cong. Rec. S 16607

(November 21, 1989) .... . 25

Lynch v. United States

292 U.S. 571 (1934) .... 7, 28 135 Cong. Rec. H 9686

(November 21, 1989) ..... 25

Rainier View Assocs. v.

United States Department of 135 Cong. Rec. H 9688

Housing and Urban Development, (November 21, 1989) ..... 26

848 F.2d 988 (9th Cir. 1988),

cert. denied, 490 U.S. 1066 Williston on Contracts,

(1989) ° 6 © 8 &°s. See passim 3rd Ed. oie = » © 6 e ¢ 27

United States v. Seckinger,

397 U.S. 203 (1970) ..... . 12

STATUTES AND REGULATIONS

Section 801 of the HUD Reform

Act of 1989, Pub. L. No.

101-235, 101-235, 103

Stat. 2057 . . .«. « « « « e« passim

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1992

ALPINE RIDGE GROUP, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

AMICUS CURIAE BRIEF OF SOUTHWIND

ACRES ASSOCIATES, SOUTHGATE VILLAGE

APARTMENTS AND OTHER CLASS MEMBERS AS

AMICI CURIAE IN SUPPORT OF RESPONDENTS

INTEREST OF THE AMICI CURIAE

Southwind Acres Associates and

Southgate Village Apartments are owners

of housing projects which fall under

Section 8 of the United States Housing

Act of 1937 as amended, 42 2U«.S.C.

§1437(f) ("Section 8"). These limited

partnerships are plaintiffs in an action

pending in the United States District

2

Court for the Eastern District of

Oklahoma styled Southwind Acres

Associates, a Limited Partnership; and

Southgate Village Apartments, a Limited

Partnership, Plaintiffs vs. Jack F. Kemp,

et al., (HUD), Defendants, Case No. CIV-

91-125-C. The issues involved in this

action are identical to those in this

appeal, challenging the constitutionality

of Section 801 of the National Housing

Act. This action is stayed pending this

appeal. The remaining Amici Curiae

(identified in Appendix "A") are Section

8 project owners with projects located

throughout the United States, in judicial

districts in addition to the Ninth

Circuit, represented by the same co-

counsel for Southwind Acres Associates

and Southgate Village Apartments in the

Eastern District of Oklahoma. Further,

the additional Amici Curiae are members

of the class and group of plaintiffs in

3

that certain class action pending in the

United States District Court for the

District of Nebraska styled Federal

Housing Partners IV Limited Partnership,

an Iowa Limited Partnership, et al.,

Plaintiffs vs. Jack Kemp, Secretary of

the United States Department of Housing

and Urban Development, et al.,

Defendants, Civil Action No. 89-0-812.

This action is also stayed pending this

appeal.

The Amici Curiae have a strong

interest in the issue of the

constitutionality of Section 801 of the

National Housing Act because the

resolution of this issue will determine

their contract rights pursuant to their

Housing Assistance Payment Contracts with

HUD.

4

SUMMARY OF ARGUMENT

l. Pursuant to Section 8 of the

National Housing Act, private developers

contracted with HUD to construct unique

housing which would only be viable

through HUD's subsidization of the rent

the tenants were able to pay. To induce

the developers to construct the projects,

HUD included provisions in their

Contracts with the developers which would

protect the owners from future economic

uncertainties. HUD promised to adjust

the rents in the projects in accordance

with published rent adjustment factors

promulgated by HUD.

2. Although HUD was statutorily

empowered to use either "fair market

rental" adjustments or adjustments based

on published factors, HUD contracted to

use the objective, hassle-free factor

adjustments for which the project owners

bargained. From 1974 through 1980, HUD

5

adjusted the contract rents through the

use of the Autcmatic Annual Adjustment

Factors just as both parties had intended

and contracted.

3. When HUD and Section 8 project

owners entered into HAP Contracts in

1974, all parties bargained for and

intended that the rents would be adjusted

based on Automatic Annual Adjustment

Factors, which would be published at

least annually in the Federal Register.

The Automatic Annual Adjustment Factors

would be the sole means for determining

rent adjustments. However, after a

period of seven (7) years, HUD

unilaterally amended the terms of the

contract by using comparability studies

as an independent method of determining

rent adjustments, thereby abandoning the

agreed upon formula as the sole means of

adjusting contract rents. HUD had no

authority to unilaterally amend the

6

contracts by imposing additional methods

of adjusting contract rents.

4. The court in Rainier View

Associates v. United States Department of

Housing and Urban Development, 848 F.2d

988 (9th Cir. 1988) cert. denied, 490

U.S. 1066 (1989), properly interpreted

the hAP Contracts as the parties intended

when they were executed. HUD elected the

option to adjust the rents based on a

reasonable, published formula and

incorporated this option into the form

contract which it drafted. Rainier

View's interpretation of section 1.9(d),

the overall limitation provision of the

contract, was proper and must not be

disturbed. It found that Section 1.9(d)

did not give HUD the authority to adjust

the contract rents by unilaterally

imposing comparability studies as one of

the means to determine the rent. The

interpretation of the overall limitation

7

provision which HUD urges this Court to

adopt completely ignores the intent of

the parties which existed when they

entered into HAP Contracts in 1974.

5. Section 801 of the Housing

Reform Act, 42 U.S.C. 1437f£(c)(2)(C)

(Supp. II, 1990), passed at the request

of HUD, was enacted to save the

Government money after the court in,

Rainier View, declared that HUD's use of

comparability studies as an inde, endent

basis to determine contract rents was

contrary to the intent and bargained for

terms of the HAP Contracts. The Alpine

Ridge Group, et al. v. Jack F. Kemp, 955

F.2d 1382 (9th Cir. 1992), holding that

Section 801 is unconstitutional, as it

alters, retroactively and prospectively,

agreed upon and bargained for contract

obligations of HUD merely to save money

is proper and should not be disturbed.

That holding is consistent with Lynch v.

United States, 292 U.S. 571 (1934), which

held that Congress cannot abrogate

contractual obligations of the Government

simply to save money . Since the sole

reason for Section 801 was to save money,

it must be held unconstitutional and the

decision being reviewed by this Court

must be affirmed.

ARGUMENT

l. The Background. In 1974,

Congress enacted Section 8 of the

National Housing Act’ to induce private

developers to build and operate rental

housing for elderly, handicapped and poor

tenants. HUD sought private developers

to design, construct and operate these

Section 8 projects. These were risky

ventures to the developers, however, and

in order to induce developers’ to

participate in the program, HUD gave

*42 U.S.C. §1437(f)

———_

9

assurances to these owners in their

contracts (Housing Assistance Payment or

"HAP" Contracts) that the full faith of

the federal government stood behind its

obligations.’

To further convince private

developers to participate in these high

risk projects, the HAP Contracts provided

for automatic annual rent adjustments to

be applied to determine contract rents

due to the owner from HUD. These

adjustment factors were material and

critical to the project owner's decision

to participate in Section 8 subsidized

housing project ventures.

In the Federal Housing Act, Congress

provided HUD with two (2) mechanisms for

determining rent adjustments, set forth

71.6 Government Assurances To Owner. The

execution of this agreement by the government

signifies that the faith of the United States is

solemnly pledged to the payment of housing

assistance payments pursuant to the contract and

that funds have been obligated by the government

for such payments.

10

in subsection (c)(2)(A) of Section 8:

The assistance contract shall

provide for adjustment annually

or more frequently in the

maximum monthly rents for units

covered by the contract to

reflect changes in the fair

market rentals established in

the housing area for similar

types and sizes of dwelling

units, or if the Secretary

determines, on the basis of a

reasonable formula. (Emphasis

added).

These methods were the only

statutorily authorized ways in which HUD

could adjust contract rents to be paid to

project owners. The term "comparability

studies" is absent from the governing

Section 8 Statute.

2. The Parties Intended To Utilize

the AAAFs As the Sole Method Of Adjusting

Contract Rents. Based on this statutory

authority, HUD could have chosen either

of these methodologies to form a part of

the bargain when contracting with Section

8 project owners regarding the subject of

annual rent adjustments. HUD chose the

11

latter of the two (2) options presented

by subsection (c)(2)(A), that of a

reasonable formula. This reasonable

formula approach, chosen and standardized

by HUD, became the Automatic Annual

Adjustment Factors (AAAFs) found in

Section 1.9b of the HAP Contracts, which

provides in pertinent part:

(1) Automatic Annual Adjustment

Factors will be determined by

the Government at least

annually; interim revisions may

be made as market conditions

warrant. Such Factors and the

basis for their determination

will be published in the

Federal Register....

(2) On each anniversary date

of the Contract, the Contract

Rents shall be adjusted by

applying the applicable

Automatic Annual Factor most

recently published by the

Government.

Thus, when project owners were

presented with the opportunity to enter

12

into HAP Contracts drafted by HUD’

setting forth the basis upon which they

would receive annual rent adjustments,

these owners relied upon:

(1) HUD had agreed not to

determine annual rent

adjustments based oon fair

market rentals in the housing

area for similar types and

sizes of dwelling units; and

(2) HUD had agreed to provide

automatic rent adjustments by

virtue of specific, defined

factors which would be

published in the Federal

Register, at least annually.

HUD marketed the Section 8 program

with an emphasis on the fact that rents

would be adjusted by use of these

published, automatic adjustment factors

as opposed to an arbitrary or subjective

case-by-case basis.

It has been established by the

*contracts should be construed less favorably

against the drafter. United States v. Seckinger,

397 U.S. 203, 210 (1970). This principle applies

to the government because of its vast economic

resources and stronger bargaining position in

contract negotiations. Id., P. 216.

13

Respondents in this case, and it is also

true for amici curiae, that their

decision to undertake Section 8 project

construction, maintenance and operation

was based in major part on the manner in

which their contract rents were to be

adjusted. These parties relied on the

representations of the Government and the

language of the HAP Contracts themselves,

both of which stated to these project

owners that their rents would be

determined by use of AAAFs, in reaching

their decision to enter into Section 8

construction projects and contracts.

In addition to the project owners’

intent and belief that the contract rents

were to be adjusted by AAAFs, from 1974

to 1981 HUD adjusted contract rents in

this manner. At the inception of this

program, HUD apparently had neither

intention nor belief that the use of

“comparability studies" or other outside

14

or subjective factors would come into

play to alter or determine contract

rents.

HUD's construction of the applicable

provisions of the HAP Contracts was the

same as the project owners. This fact is

evidenced by:

(1) The strongest indication of

what the parties actually

bargained for in Section 1.9 of

the HAP Contracts, is that HUD

did in fact determine and

adjust contract rents annually

by operation of AAAFs from 1974

through 1980. This constitutes

a course of performance and

dealing between the parties

which is the best indicator of

what the intention of the

parties was with regards to the

contract;

(2) HUD specifically stated and

represented to prospective

Section 8 project owners in

marketing the program that this

was HUD's understanding of how

rents were to be adjusted;

(3) When HUD first amended its

form contract, it used the same

language formerly found in

“Restatement (Second) Contracts §202 comment

15

section 1.9(b) of the original

contracts in its new contracts,

codified as section 1.8(b). ;

and

(4) HUD's own agency

regulations in effect at the

time provided that contract

rents would be determined by

use of AAAFs.

For the first seven (7) years of the

performance of Section 8 HAP Contracts

between the parties there was 170

indication that HUD's perception of its

promises or its intentions with regard to

these projects was any different than the

*automatic Annual Adjustments. (1) Automatic

Annual ustmen ors w determined by

the Government at least annually; interim

revisions may be made as market conditions

warrant. Such Factors and the basis for their

determination will be published in the Federal

Register. These published Factors will be

reduced appropriately by the Government where

utilities are paid directly by the Families. (2)

On each anniversary date of the Contract, the

Contract Rents shall be adjusted by applying the

applicable Automatic Annual Adjustment Factor

most recently published by the Government.

Contract rents may be adjusted upward or

downward, as may be appropriate; however, in no

case shall the adjusted Contract Rents be less

than the Contract Rents on the effective date of

the Contract.

*24 C.F.R. §888.203(b), 41 Fed. Reg. 49440

(1976).

16

project owners.

3. HUD Abandoned Agreed Upon

Formula as the Sole Method to Determine

Contract Rents. In 1981, HUD abandoned

the AAAFs as the sole method of

determining contract rents, by virtue of

the utilization of “comparability

studies" to place a cap or limitation on

rents provided in the HAP Contracts. HUD

claims that the use of these

comparability studies was authorized to

prevent the occurrence or existence of

material differences between the rents of

Section 8 projects and comparable

unassisted units.’ The jurisdictional

papers show that HUD's use of

comparability studies, which were not

authorized by statute, regulations or the

contracts, had far different effects.

Rather than simply preventing material

"HUD Brief, Page 17.

17

differences in rents between assisted and

unassisted units, HUD's use of

comparability studies actually tampered

with and eroded the bargained for

differences in rénts which existed at the

time of the contracts between the

assisted and unassisted units.’ For

example, the jurisdictional papers show

that HUD, and the contracts, recognized

that there would be a disparity between

the assisted contract rents of the

Section 8 project owner and unassisted

units in the area. The HAP Contracts, in

section 1.9(d), specifically recognize

this disparity and prohibit HUD from

tampering with or altering this

relationship between assisted and

unassisted rents over the life of the

contracts. Section 1.9(d) provides in

pertinent part:

"Respondent Alpine Ridge Group Brief, Page

36.

18

"This limitation (the overall

limitation clause) shall not be

construed to prohibit

differences in rents between

assisted and unassisted units

to the extent that such

differences may have existed

with respect to the initial

contract rent."

These provisions of the HAP

Contracts, properly harmonized, result

in the inescapable conclusion that the

provisions were designed to operate in

such a manner that the overall limitation

provision was not to be imposed as a

vehicle to eliminate all differences

between unassisted rents and assisted

rents in a given area. HUD's use of the

comparability studies and the overall

limitation provision of section 1.9

violates the intent, spirit and letter of

the HAP Contracts.

4. Rainier View Decision Properly

Construed Meaning of Contracts And Intent

*HAP Contracts, Section 1.9(d).

19

of Parties. Following HUD's unilateral

decision to determine contract rents by

utilization of comparability studies as

an independent limitation on contract

rents, project owners in the Western

District of Washington chailenged this

procedure in the Rainier View case.”

Regarding the intention of the parties to

the HAP Contracts and the meaning of the

Significant provisions, Rainier View

found that:

(1) The overall limitation

provision of Section 1.9(d) is

not an independent basis for

making annual rent adjustments;

(2) In the HAP Contracts, HUD

elected the formula method

(AAAFs); and

(3) HUD's utilization of

comparability studies to

enforce its construction of the

overall limitation provision

would make all rent adjustments

depend on the market survey

method, contrary to the

language of the contracts

48 F.2d 988 (9th Cir. 1988), cert. denied,

490 U.S. 1066 (1989).

20

agreed upon by the parties.

Rainier View found that HUD's

interpretation of the overall limitation

provision of the HAP Contract is contrary

to the intention expressed in the

contract language itself and the purpose

of the overall limitation provision found

1

in HUD's regulations.’ As found by

Rainier View, the proper use of the

overall limitation provision and those

comparability studies used in conjunction

therewith could only be to establish

separate AAAFs or revise AAAFs in effect

for that particular area. The

interpretation of the contract provisions

found by Rainier View had as its basis

primarily the expressed intention of the

parties, based on the factors previously

discussed herein. The contract language

and the intent of the parties was not to

494 C.F.R. §888.204 (1987).

21

allow HUD to unilaterally impose

additional methods of adjusting rents.

The parties did not intend for HUD to

abandon the AAAFs, as the sole method of

adjusting rents by the use of

comparability studies as an independent

basis for making rent adjustments. As

the Rainier View Court stated, at page

991:

"that is clear from the

contract language and is

consistent with the statutory

language and HUD 's own

regulations interpreting the

Statute."

5. Following The Rainier View

Decision Congress Enacted Section 801 To

Save Money. The effect of the Rainier

View decision upon HUD and upon Congress

was great indeed. HUD did not believe

that Rainier View was correctly

decided.” Based on its opinion that

Rainier View was wrongly decided, HUD

‘HUD Brief, Page 8

22

made the decision not to apply its ruling

outside the Ninth Circuit.” Section 8

project owners demanded treatment in

accordance with the mandate of Rainier

View. HUD refused to do so. The

prospect of additional litigation and

massive payments of unpaid contract rents

per the original contract terms loomed

large. To avoid the performance of its

obligations and to obtain a cure for this

problem, HUD sought the assistance of

Congress. This assistance was provided

by Congress and took the form of Section

801 of the Reform Act.** The provisions

of Section 801 and its prospective and

retrospective aspects are thoroughly

discussed in the jurisdictional papers.

HUD, in its Brief, describes and

314.

Mpub.L. No. 101-235, 103 Stat. 2057-2059,

(codified at 42 U.S.C. 1437£(c)(2)(C) (Supp. II,

1990) and 42 U.S.C. 1437 Note (Supp. II, 1990).

23

characterizes Section 801 as curative

legislation enacted for several laudable

purposes including: (1) to restore

uniform and appropriate procedures to

govern rent adjustments; and (2) to

ensure a reasonable rate of return to the

owners’ while effecting the original

Congressional objective of avoiding

excessive rents and rates of return for

Section 8 projects.”

HUD asserts that these goals were to

be achieved by Section 801 by prescribing

new procedures for calculating rent

adjustments, both retrospectively and

prospectively. While this sounds nice,

what HUD fails to focus on is that "new

procedures for calculating rent

adjustments both retrospectively and

prospectively" means that the bargained

for and intended provisions of the HAP

yup Brief, Page 8.

24

Contracts were being abrogated in a

wholesale fashion which resulted in:

(1) the deprivation of

bargained for contract rights;

(2) payment of rents to Section

8 owners less than bargained

for and anticipated; and

(3) discretion and ability in

HUD to alter annual contract

rents by arbitrary and

subjective measures for the

duration of the terms of the

HAP Contracts.

In reality, as established in the

district courts in summary judgment

proceedings in both Alpine Ridge’, and

Acacia Villa’, Congress's enactment of

Section 801 was primarily an attempt to

save the Government money which it would

otherwise have to pay Section 8 project

owners to honor the statutory and

contract provisions governing HAP

Contract rent adjustments. Ample

“764 F.Supp. 1393 (W.D. Wash. 1990).

1774 F.Supp. 1240 (C.D. Cal. 1990).

25

evidence exists that the real purpose of

Section 801 was to save Congress money.

Senator D'Amato stated that "the Bill

reduced the loss to $210 million, a

savings of over $390 million". Senator

Sasser, Chairman of the Budget Committee,

was quoted as saying in the Congressional

Record’, “by moving quickly to enact

this legislation with its ‘Rainier View

fix' we could save the Government

hundreds of millions if not more than a

billion dollars." The Chairman of the

Housing Subcommittee, Representative

Gonzalez, illustrated that Section 801

would reduce retroactive costs $210

million and reduce prospective costs to

$500 million over the next ten (10)

20

years.

*°135 Cong. Rec. S 16602 (November 21, 1989).

‘9135 Cong. Rec. S 16607 (November 21, 1989).

79135 Cong. Rec. H 9686 (November 21, 1989).

26

In contrast to the characterization

of Section 801 advanced by HUD in its

Brief, these comments aptly illustrate

that Section 801 was intended to shift

the burden of HUD's use of comparability

studies from Congress and the people

squarely to the backs of the individual

Section 8 project owners whose rents were

adjusted by use of these vehicles. For

it is clear that if Congress is

successful in reducing its rent

obligations by virtue of Section 801,

Congress will save money it would

otherwise be obligated to pay individual

project owners under the mandate of

Rainier View. Congress intended to save

a loss of $2 billion according to

Secretary Kemp in a letter to Congress.”

Section 80l's attempt to save money

should not be permitted by this Court for

71135 Cong. Rec. H 9688 (November 21, 1989).

27

a number of reasons. Of primary

importance, Section 801 abrogates the

intention of the parties and the clear

meaning of the contracts. The intention

of the contracting parties should always

be given the meaning ascribed to the

contract by the parties at the time the

contract was entered into.” The

contract has been found to be unambiguous

in its meaning in the Rainier View

decision. The fact the Congress and HUD

disagreed or were unhappy with the

Rainier View decision provides no basis

for vitiating the parties' intentions

upon entering into these contracts.

HUD's Brief cites no cases and does not

seriously contend that Congress has the

power to abrogate its contractual

obligations in contracts between the

Federal Government and private parties

*2williston on Contracts, jrd Ed. §601 at p.

306.

28

simply because it disagrees with the

ruling of a court or does not enjoy the

sting of the obligation. To the

contrary, this Court has held in Lynch v.

3

United States,* that "Congress was

without power to reduce expenses by

abrogating contractual obligations of the

United States." This Court has also

noted in Bowen v. Public Agencies Opposed

to Social Security Entrapment, that

Congress is without power to repudiate

its own debt simply in order to save

money. The Lynch and Bowen cases were

dispositive of this issue in the Ninth

Circuit's opinion in Alpine Ridge.” In

Alpine Ridge, Section 801 was correctly

seen as an attempt to save money rather

than true curative legislation as

23992 U.S. 571 (1934).

24477 U.S. 41, 54-55 (1986).

75955 F.2d 1382 (9th Cir. 1992).

29

follows:

This is not a case where

Congress alters the effect of a

court decision by amending a

statute. Through section 801,

Congress has attempted to

change section 8's original

meaning retroactively, 14 years

after its enactment. The fact

that Congress does not

recognize its obligation under

the contracts as interpreted by

Rainier View does not affect

the validity of the owners’

rights, or Congress's inability

to alter them by retroactively

amending the underlying

statute.

HUD also denies that Congress

acted solely to save money. It

argues that section 801 was

enacted as a compromise to end

litigation over the issue of

the appropriate method for

determining annual section 8

rent adjustments. HUD points

to no authority permitting

Congress to legislate a

compromise to disputes

involving vested property

rights in order to prevent

costly or wasteful litigation.

HUD's argument again assumes

the absence of any vested

property right in annual

formula rent adjustments, an

issue that we have decided

against it.

HUD is unable to present any

argument explaining section 801

30

as anything other than

Congress's attempt to save

resources and money - by

legislating a compromise of its

disputes with the owners. We

hold that these cases fall

within the scope of Lynch and

Perry, and that through section

801, Congress has attempted to

reduce an obligation in order

to save money. Although HUD

and Congress do not recognize

this obligation, it has been

established by the final

judgment in Rainier View.

Therefore, we hold that section

801 unconstitutionally

abrogates the owners' vested

property rights in violation of

the fifth amendment.

Since Section 801 was primarily an

attempt to save money, it cannot

withstand the scrutiny required by this

Court and the Constitution for

legislation which affects vested

constitutional property rights. If

Section 801 is allowed to stand, the

property rights of Section 8 owners will

be materially impaired. HUD

characterizes the impairment of Section 8

property owners’ rights as something less

31

than substantial. However, throughout

HUD's Brief and other jurisdictional

papers, it is apparent that Congress and

HUD considered this impairment, in terms

of dollars, a subject of great magnitude,

ranging between a low of $2 million to a

high of $2 billion, as_ stated by

Secretary Kemp. While perhaps on a case-

by-case basis the impairment would not be

extraordinary in terms of dollars, the

overall impairment of Section 8 project

owners’ property rights over the term of

the Contracts by virtue of the Section

‘801 legislation is monumental indeed.

CONCLUSION

For the reasons stated herein, Amici

Curiae submit that the judgment of the

Ninth Circuit in these consolidated

appeals should be affirmed.

Respectfully submitted.

32

LARRY DERRYBERRY

(Counsel of Record)

GEORGE WILLIAM VELOTTA, II

GLADYS E. CHERRY

JAMES W. DOBBS

DERRYBERRY, QUIGLEY, PARRISH,

SOLOMON & BLANKENSHIP

4800 North Lincoln Boulevard

Oklahoma City, Oklahoma 73105

(405) 528-6569

and

GARY L. MCKNIGHT

P.O. Box 310

McAlester, Oklahoma 74502

(918) 423-7516

Appendix "A"

List of Amici Curiae

United Keetowah Associates, Ltd.; Cape

Lacroix, II, A Missouri Limited

Partnership; 17th Place Associates, an

Illinois Limited Partnership; Cardinal

Apartment, Inc. ; Crescent Arms

Associates; Nowata Gardens Apartments of

Chickasha, Oklahoma, Inc.; Western

Village Apartments, Ltd; Forest Glen

Estates, Inc.; Castle Gardens Charitable

Trust; The Atlantis Apartment, Inc.;

Clyde B. Goldsmith, Bernard L. Lifshutz;

Southwood Patio Homes; Feliciana, a

Louisiana Partnership in Commendam;

Concordia Limited Partnership; Alouette

Limited Partnership; Tangi Village

Limited Partnership; 3433 Tulane Ave., a

Louisana Partnership in Commendam; Forest

Towers, Oklahoma, a California Non-Profit

Corporation; College Apartments, as

Yale Village Charitable Trust; Sierra

Manor, Inc.; Sunset Towers, Inc.;

Appendix "A"

Highland Park, Inc.; Gulfway Terrace,

Incorporated; Robert W. Green; Hoover &

Hoover, Ltd.; Hoover Development, Ltd.;

Better Housing, Incorporated; Lipton

Properties III, Ltd. ; Tower Oaks

Partnership; Robert W. Price, Sr.; Ted W.

Price, Sr.; Robert W. Price, Jr.; Ted W.

Price, Jr.; SASA Limited Partnership;

Allen Market Lane Apartments Associates,

a Missouri Limited Partnership; Blair

School Apartment Associates; Hamilton

Development Associates; Lindell Plaza

Redevelopment Corporation; Minerva Place

Apartments Associates, a Limited

Partnership; O'Fallon Place Limited

Partnership; O'Fallon Place Limited

Partnership, Phase II; O'Fallon Place

Limited Partnership, Phase III; Revive

103 Associates; West End Apartments

Associates; Madison Village, Ltd.; Arthur

P. Gorman and _ Robert H. Gardner;

Vicksburg Village Limited; Ashley House

Appendix "A"

Associates; Hyatt Manor Limited; Valley

Hi Associates; Algood Manor, Ltd.; Kanis

Properties, Ltd.; Asheboro Properties

Ltd.; Athens Properties Ltd.; Bon Air

Associates; Bridge Creek Properties Ltd.;

Brooksfield Properties Ltd.; Calhoun

Properties Ltd.; Cartersville Properties

Ltd.; Lakeview Properties Ltd.; Columbia

Properties Ltd.; Cumberland Properties

Ltd.; Dunlap Properties Ltd.; Eastman

Properties Ltd.; Fayetteville Properties

Ltd.; Forest Creek Properties Ltd.;

Forsythe Properties’ Ltd.; Greenwood

Properties Ltd.; LaFollette Properties

Ltd. ; Loudon Properties Ltd.; Macon

Properties Ltd.; Manning Properties Ltd. ;

Mauldin Properties’ Ltd.; Fitzgerald

Housing Assoc. Ltd.; North Augusta

Properties Ltd.; Park Lake Properties

Ltd. ; Pebblebrook Properties Ltd. ;

Pendleton Properties Ltd. ; Pickens

Properties Ltd.; Raleigh Properties Ltd.;

Appendix "A"

Richmond Properties Ltd. ; Riverside

Properties Ltd.; Idlewild Properties,

Ltd.; Seneca Properties Ltd.; Sneedville

Properties Ltd.; Thomaston Properties

Ltd.; Waynesboro Properties Ltd.; Winston

Properties Ltd.; Azalea Woods Ltd.;

Marshall Arms Associates Limited; Virgil

Eisenbiez; Lynn Oak Court Company;

Cimarron Group, Inc.; Eastbrook, Limited;

Payne-Lincoln Properties; Fox Ridge

Cooperative Townhouses, Inc.; Cody Plaza,

a Kansas Limited Partnership; Sullivan

Hall Housing Partnership, a Missouri

Limited Partnership; Friendship Manor

Housing Partnership, a Missouri Limited

Partnership; Massey Park Housing

Partnership, a Missouri Limited

Partnership; Northlawn Gardens Limited

Dividend Housing Association, a Michigan

Limited Partnership; Alabama Baptist

Retirement Center d/b/a/ Clara Verner

Towers Apartments; Lakeview Apartments,

Appendix "A"

Ltd.; Logan Apartments, Ltd.; Knights

Manor, Incorporated; Leslie E. Salone

d/b/a Universal Management ; CMD

Associates, Michigan Co-Partnership d/b/a

JG Properties; Veard - Ottawa, Ltd.;

Veard - Gassaway, Ltd.; Homes - Cases,

Inc.; Waterside Estates, Lakeview

Estates, Ltd; Terrill Commons, Ltd.;

Veard - Parsons, Ltd; River Hill Limited;

Terraced Park Limited; Princeton Park

Apartments, Limited; Barron Builders and

Management Company; Taven Apartments, a

Limited Partnership; Columbia Apartments;

Garden City Apartments Limited; Centrex

North Redevelopment Corp.; Paul Tipps

Enterprises #1; Holden House Associates,

an Ohio Ltd. Partnership; Urban

properties No. 2, a/k/a Holt Manor;

Fairwood Manor Development Company; East

Mall Associates; CASCO Associates; Urban

Properties #1; Paul Tipps Enterprises #2;

Carpenter's Associates; Paul Tipps

Appendix "A"

Enterprises #4; Belton Garden Associates;

Blacherne Associates; Anthony Arms

Associates; Academy Associates; Federal

American Properties; Liberty Park

Development Company; Logan Hill

Associates; Meadow Village, Ltd. ;

Parkview Place Company; Penn Circle Tower

Development Company; Jasper Housing

Development Company; Savoy-Hoosier

Associates; Southern Oaks Apartments,

Inc.; Baytown Urban Development, Ltd.j;

Weyerbacher Terrace Associates; Henry

Fredricks; Cane Gardens Ltd. Partnership;

Princeton Park Ltd; River Hill Ltd.;

Country Meadows Apartments; Terrace Park,

Ltd.; F.L. Richards; Sanders Heights

Apts., an Oklahoma Limited Partnership;

Village DuLac, Inc.; National Church

Residences of Buffalo, N.Y ; National

Church Residences of Baltimore; National

Church Residences of Middletown; National

Church Residences of Gahanna; National

Appendix "A"

Church Residences of Sharpsburg,

Pennsylvania, Inc.; National Church

Residences of Ceredo, West Virginia,

Inc.; National Church Residences of

Bristol Village; West Virginia Homes

Inc.; George Maharg; Jaycom Charitable

Trust; Robert Pesa; Peterson Apartments,

a Michigan Partnership; Branchwood

Associates of Hardeeville; Baytree

Associates of Ridgeland; Cambridge

Association of Lamar; Spruce Pines

Associates of Lentiens Tall Pines

Associates of Loris; Walterboro Village

Associates; Willow Oaks Associates of

Cowpens; Amberly Apartments Associates;

Eastpointe Apartments Associates; Ashwood

Apartments Associates; Southfield

Townhouses Associates; Kettering Square

Apartments Associates; Woodview Manor

Associates; Southmoor Associates; Lincoln

Hills Development Corporation; Joseph

Herzig and Barbara Herzig; Barton House

Appendix "A"

LDHA; Elizabeth Arms Limited Partnership;

Broad River Limited Partnership; Parkwood

South Limited Partnership; Bethlehem

Village Limited Partnership; Profit Hills

Limited Partnership; Whitney Young

Terrace Limited Partnership; National

Church Residences of Chillicothe, Ohio;

and Roth-Hel fman Associates, Ltd, a

Michigan Limited Partnership